Why Being A Loan Officer In The Mortgage Business Is Horrible

Why Being A Loan Officer In The Mortgage Business Is Horrible

… and why pursuing a career in home loans is pretty much doomed to failure.

I gave the mortgage industry — the whole loan originator gig — a serious go of it a few years back. That was just before the entire real estate market melted down.

But even then, I knew after about six months that it just wasn’t for me. And as it worked out, I ditched just before thousands of loan officers were driven out by the economic collapse.

It’s odd, really, that I even gave it a whirl. I already had a great freelance sales gig in place, and that was earning me a great income. But I’m the kind of guy who is always out there looking for something new and more exciting. It was right when I was moving to Dallas, and the whole “mortgage consulting” thing seemed as if it could be fun, and I had buddies in the industry pulling down $25K a month routinely. So I thought what the hell, and I gave it a go.

But it didn’t take long for me to realize I was in the WRONG PLACE.

Because there was no way it was ever going to create the lifestyle I wanted for myself.

Even leaving aside all of the stuff I’m about to cover here, (even leaving aside having to pander to real estate agents, and what that does to your soul), at the end of the day, trying to sell mortgages — working in that industry — is just nowhere near capable of creating the kind of life I’ve got going on and had come to get used to.

The hours, the office, the boss, the stress, the tedium, the grief … It’s enough to make you want to jump off a bridge. Seriously.

But even leaving that stuff aside. Even assuming you’re a glutton for misery and your idea of a good time is a life of constant, bitter struggle and mind-wracking tedium … Fundamentally there are three main reasons why I think trying to sell in the mortgage industry is a really bad idea, especially right now.

FIRST –
The gravy train is over. It has become harder than ever to close deals.

There are several reasons for that. I’ll list a few of them:

The housing market has tanked, taking with it a lot of the people who used to be in the industry. The ones who are left are desperate for business. This has the effect of not only putting you on a crappy level with the client (since it’s get the deal or eat Ramen noodles all next month, you end up begging for business, cringing under anything a client says or demands), but it also has the effect of making the whole mortgage racket more and more a rate game.
And that’s the second reason for why it’s harder than ever to close deals. Rate are too damn high, they’re fluctuating all over the place because of all the government interference in the economy, and your prospects are OBSESSING over rate, ready to cut your throat and run to the guy down the block and leave you high and dry with nothing, over an eighth of a point.
What else is making it hard to close deals is the fact that they’ve taken away all but a small handful of programs — I think you’ve got THREE now; used to be dozens. Everyone needs to put money down, and everyone is stuck in a fixed rate. Like it or lump it. (Problem is, a lot of people are choosing to lump it.)
And finally, one other thing making it harder to close deals is the increased difficulty of getting lenders and proposed loans to fall in line with the new guidelines. Used to be, deals could be slam-dunks and you knew it. You could bury three points in the YSP and still slam-dunk it. Nowadays nothing is a slam-dunk, even at par, and underwriting can kill a deal sixteen different ways before sun down, and leave you feeling you’ve been mugged in a back alley.

So those are some of the reasons why it’s become harder to close deals. And that’s assuming you can even find prospects and get the deals into processing and submitted to begin with. That takes me to the second reason I think trying to sell mortgages as a loan officer is a bad idea:

SECOND REASON –
It is just flat out hard as hell to attract attention anymore, much less differentiate yourself from all of the other loan guys out there.

For one, people are jaded and afraid of getting screwed. They’ve become insanely suspicious — in part because they’re being flooded every day with offers for free credit reports, refinancing opportunities, doom-and-gloom horror stories of foreclosures and mounting unemployment.

Try marketing yourself as a loan officer. Good lord. You’re competing against fifty thousand other hungry mortgage guys. You’re competing against huge banks and desperate net branches. And everyone is selling on price, price, price. Selling on having the “lowest rate.” Everyone is fighting to make a buck. They’re running ads, they’re running banners, they’re sending out useless mailings, they’re falling over each other trying to get someone –anyone — in town to refer them some business.

Not a pretty sight.

And to make it worse, the big advantage you USED to be able to have was in specializing in something, some niche. The guys making the best money were framing themselves as “mortgage consultants,” and trying to stand somewhere between being a loan officer and a financial advisor.

And it worked for long time. The guys who were good at it made a fortune.

But things have changed. Back in the day, you had dozens of programs to choose from. You could customize a mortgage solution for a client, and really bring value to that interaction. You could build a plan for them, around their goals and dreams, and show them how the mortgage you were structuring for them would help them and their families get where they wanted to go.

No more no-money-down programs. No more stated-income or stated-asset programs. No more negative amortization loans with investment plans behind them.

Increased restrictions on investment properties.

Massive reduction of new-construction loans, and the effective extinction of jumbo (much less super-jumbo) loans.

There’s no way to “consult” or offer “mortgage-planning” when it comes down to a fixed rate. People have been trained to focus exclusively on price.

And there’s always someone willing to cut your throat for an eighth of a point.

So the second reason why I’m against selling in the mortgage industry came down to how hard it is to find good leads, and how hard it is to differentiate yourself, or in any way rise above price.

The third reason is more personal:

THIRD –
It just takes so much damn WORK to try to close a mortgage deal.

Even leaving aside the effort it takes to bring in a qualified lead. (And “qualified” has a whole other meaning when it comes to home loans. Someone can want a new home loan all he wants. Whether he qualifies, under the new guidelines, however … That’s a completely different story.)

Even leaving aside the effort it takes to get the prospect to want to work with you.

That still leaves all of the endless documentation required to get the deal closed and a commission check in your pocket.

There is the appraisal, the sales contract, the gigantic loan application, the credit check, the required bank statements and pay stubs, the verification of employment and income, the verification of bank funds, the home-owners insurance, the mortgage insurance, and on and on and on it goes.

Then the client has to actually get approved.

And come up with the down payment.

(And somehow, during all this, manage to avoid the hoard of hungry banks and mortgage companies and other loan officers out there trying to steal your deal out from under you before you can get it to closing.)

And even THEN it’s not over. Because it takes time, you see. And you have the pure joy of sweating under the stress of endless underwriting grief, where nothing is easy anymore, and every closing is precarious and uncertain.

So let us try to sum up …

At the end of the day, trying to sell home loans in the mortgage industry is hell on wheels. It is getting harder and harder, to earn less and less.

This year the industry is predicted to take another slug in the head, and thousands more will end up unable to close enough loans to pay their bills, or see their mortgage companies chain their front doors closed, without so much as a severance check from commissions on deals that had already funded.

I predict that we’re headed toward complete and utter commoditization of mortgage lending, with mounting government controls, where everything becomes cookie-cutter and in the hands of a few gigantic banks.

So unless you want a future in a cubicle, taking down loan applications over the phone and entering them into a computer for eight bucks an hour (assuming things don’t go completely automated, and they still need someone to at least type the stuff in) …